Patient capital is another name for long term capital. With patient capital, the investor is willing to make a financial investment in a business with no expectation of turning a quick profit. Instead, the investor is willing to forgo an immediate return in anticipation of more substantial returns down the road. Although patient capital can be considered a traditional investment instrument, it has gained new life with the rise in environmentally and responsible enterprises. In these cases, it may take the form of equity, loan guarantees or other financial instruments, is characterized by: Willingness to forgo maximum financial returns for social impact, an unwillingness to sacrifice the interests of the end customer for the sake of shareholders Greater tolerance for risk than traditional investment capital Longer time horizons for return of capital Intensive support of management as they grow their enterpriseThe source of capital may be philanthropy, investment capital, or some combination of the two.
Patient capital is not a grant, it is an investment intended to return its principal plus interest. It does not seek to maximize financial returns to investors. On the spectrum of capital available to both non-profits and for-profits, patient capital sits between traditional venture capital and traditional philanthropy, between development aid and foreign direct investment. Thomas Friedman of the New York Times describes patient capital as having "all the discipline of venture capital – demanding a return, therefore rigor in how it is deployed – but expecting a return, more in the 5 to 10 percent range, rather than the 35 percent that venture capitalists look for." Jacqueline Novogratz of Acumen adds: patient capital "takes the best of the markets as well as philanthropy and aid. Patient capital is money invested in entrepreneurs building companies and organizations that solve tough problems like healthcare, housing, alternative energy." More'Patient Capital' for Social Ventures.
In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics. One important purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors, while abstracting away from the technological problems of achieving technical efficiency, as an engineer or professional manager might understand it. In macroeconomics, aggregate production functions are estimated to create a framework in which to distinguish how much of economic growth to attribute to changes in factor allocation and how much to attribute to advancing technology; some non-mainstream economists, reject the concept of an aggregate production function. In general, economic output is not a function of input, because any given set of inputs can be used to produce a range of outputs.
To satisfy the mathematical definition of a function, a production function is customarily assumed to specify the maximum output obtainable from a given set of inputs. The production function, describes a boundary or frontier representing the limit of output obtainable from each feasible combination of input. Assuming that maximum output is obtained from given inputs allows economists to abstract away from technological and managerial problems associated with realizing such a technical maximum, to focus on the problem of allocative efficiency, associated with the economic choice of how much of a factor input to use, or the degree to which one factor may be substituted for another. In the production function itself, the relationship of output to inputs is non-monetary. In the decision frame of a firm making economic choices regarding production—how much of each factor input to use to produce how much output—and facing market prices for output and inputs, the production function represents the possibilities afforded by an exogenous technology.
Under certain assumptions, the production function can be used to derive a marginal product for each factor. The profit-maximizing firm in perfect competition will choose to add input right up to the point where the marginal cost of additional input matches the marginal product in additional output; this implies an ideal division of the income generated from output into an income due to each input factor of production, equal to the marginal product of each input. The inputs to the production function are termed factors of production and may represent primary factors, which are stocks. Classically, the primary factors of production were land and capital. Primary factors do not become part of the output product, nor are the primary factors, transformed in the production process; the production function, as a theoretical construct, may be abstracting away from the secondary factors and intermediate products consumed in a production process. The production function is not a full model of the production process: it deliberately abstracts from inherent aspects of physical production processes that some would argue are essential, including error, entropy or waste, the consumption of energy or the co-production of pollution.
Moreover, production functions do not ordinarily model the business processes, ignoring the role of strategic and operational business management.. The production function is central to the marginalist focus of neoclassical economics, its definition of efficiency as allocative efficiency, its analysis of how market prices can govern the achievement of allocative efficiency in a decentralized economy, an analysis of the distribution of income, which attributes factor income to the marginal product of factor input. A production function can be expressed in a functional form as the right side of Q = f where Q is the quantity of output and X 1, X 2, X 3, …, X n are the quantities of factor inputs. If Q is a scalar this form does not encompass joint production, a production process that has multiple co-products. On the other hand, if f maps from R n to R k it is a joint production function expressing the determination of k different types of output based on the joint usage of the specified quantities of the n inputs.
One formulation, unlikely to be relevant in practice, is as a linear function: Q = a 0 + a
Labour economics seeks to understand the functioning and dynamics of the markets for wage labour. Labour markets or job markets function through the interaction of employers. Labour economics looks at the suppliers of labour services and the demanders of labour services, attempts to understand the resulting pattern of wages and income. Labour is a measure of the work done by human beings, it is conventionally contrasted with such other factors of production as capital. Some theories focus on human capital. There are two sides to labour economics. Labour economics can be seen as the application of microeconomic or macroeconomic techniques to the labour market. Microeconomic techniques study individual firms in the labour market. Macroeconomic techniques look at the interrelations between the labour market, the goods market, the money market, the foreign trade market, it looks at how these interactions influence macro variables such as employment levels, participation rates, aggregate income and gross domestic product.
The labour force is defined as the number of people of working age, who are either employed or looking for work. The participation rate is the number of people in the labour force divided by the size of the adult civilian noninstitutional population; the non-labour force includes those who are not looking for work, those who are institutionalised such as in prisons or psychiatric wards, stay-at home spouses and those serving in the military. The unemployment level is defined as the labour force minus the number of people employed; the unemployment rate is defined as the level of unemployment divided by the labour force. The employment rate is defined as the number of people employed divided by the adult population. In these statistics, self-employed people are counted as employed. Variables like employment level, unemployment level, labour force, unfilled vacancies are called stock variables because they measure a quantity at a point in time, they can be contrasted with flow variables. Changes in the labour force are due to flow variables such as natural population growth, net immigration, new entrants, retirements from the labour force.
Changes in unemployment depend on inflows made up of non-employed people starting to look for jobs and of employed people who lose their jobs and look for new ones, outflows of people who find new employment and of people who stop looking for employment. When looking at the overall macroeconomy, several types of unemployment have been identified, including: Frictional unemployment – This reflects the fact that it takes time for people to find and settle into new jobs. Technological advancement reduces frictional unemployment. Structural unemployment – This reflects a mismatch between the skills and other attributes of the labour force and those demanded by employers. Rapid industry changes of a technical and/or economic nature will increase levels of structural unemployment; the process of globalization has contributed to structural changes in labour markets. Natural rate of unemployment – This is the summation of frictional and structural unemployment, that excludes cyclical contributions of unemployment.
It is the lowest rate of unemployment that a stable economy can expect to achieve, given that some frictional and structural unemployment is inevitable. Economists do not agree on the level of the natural rate, with estimates ranging from 1% to 5%, or on its meaning – some associate it with "non-accelerating inflation"; the estimated rate varies from country from time to time. Demand deficient unemployment – In Keynesian economics, any level of unemployment beyond the natural rate is due to insufficient goods demand in the overall economy. During a recession, aggregate expenditure is deficient causing the underutilisation of inputs. Aggregate expenditure can be increased, according to Keynes, by increasing consumption spending, increasing investment spending, increasing government spending, or increasing the net of exports minus imports, since AE = C + I + G +. Neoclassical economists view the labour market as similar to other markets in that the forces of supply and demand jointly determine price and quantity.
However, the labour market differs from other markets in several ways. In particular, the labour market may act as a non-clearing market. While according to neoclassical theory most markets attain a point of equilibrium without excess supply or demand, this may not be true of the labour market: it may have a persistent level of unemployment. Contrasting the labour market to other markets reveals persistent compensating differentials among similar workers. Models that assume perfect competition in the labour market, as discussed below, conclude that workers earn their marginal product of labour. Households are suppliers of labour. In microeconomic theory, people are assumed to be rational and seeking to maximize their utility function. In the labour market model, their utility function expresses
Paul Anthony Samuelson was an American economist and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize in 1970, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker has called him the "Father of Modern Economics", The New York Times considered him to be the "foremost academic economist of the 20th century". Samuelson was the most influential economist of the 20th century. In 1996, when he was awarded the National Medal of Science, considered to be America's top science-honor, President Bill Clinton commended Samuelson for his "fundamental contributions to economic science" for over 60 years. Samuelson considered mathematics to be the "natural language" for economists and contributed to the mathematical foundations of economics with his book Foundations of Economic Analysis, he was author of the best-selling economics textbook of all time: Economics: An Introductory Analysis, first published in 1948.
It was the second American textbook. It is now in its 19th edition, having sold nearly 4 million copies in 40 languages, including Russian, Greek, Chinese, German, Polish, Czech, Hungarian, Swedish, Dutch, Hebrew and Arabic. James Poterba, former head of MIT's Department of Economics, noted that by his book, Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands", he entered the University of Chicago at age 16, during the depths of the Great Depression, received his PhD in economics from Harvard. After graduating, he became an assistant professor of economics at Massachusetts Institute of Technology when he was 25 years of age and a full professor at age 32. In 1966, he was named MIT's highest faculty honor, he spent his career at MIT where he was instrumental in turning its Department of Economics into a world-renowned institution by attracting other noted economists to join the faculty, including Robert M. Solow, Franco Modigliani, Robert C.
Merton, Joseph E. Stiglitz, Paul Krugman, all of whom went on to win Nobel Prizes, he served as an advisor to Presidents John F. Kennedy and Lyndon B. Johnson, was a consultant to the United States Treasury, the Bureau of the Budget and the President's Council of Economic Advisers. Samuelson wrote a weekly column for Newsweek magazine along with Chicago School economist Milton Friedman, where they represented opposing sides: Samuelson, as a self described "Cafeteria Keynesian", claimed taking the Keynesian perspective but only accepting what he felt was good in it. By contrast, Friedman represented the monetarist perspective. Together with Henry Wallich, their 1967 columns earned the magazine a Gerald Loeb Special Award in 1968. Samuelson died on 13 December 2009, at the age of 94. Samuelson was born in Gary, Indiana, on 15 May 1915, to Frank Samuelson, a pharmacist, the Ella née Lipton, his family, he said, was "made up of upwardly mobile Jewish immigrants from Poland who had prospered in World War I, because Gary was a brand new steel-town when my family went there".
In 1923, Samuelson moved to Chicago. He studied at the University of Chicago and received his Bachelor of Arts degree there in 1935, he said he was born as an economist, at 8.00am on January 2, 1932, in the University of Chicago classroom. The lecture mentioned the cause was on the British economist Thomas Malthus, who most famously studied population growth and its effects. Samuelson felt there was a dissonance between neoclassical economics and the way the system seemed to behave, he next completed his Master of Arts degree in 1936, his Doctor of Philosophy in 1941 at Harvard University. He won the David A. Wells prize in 1941 for writing the best doctoral dissertation at Harvard University in economics, for a thesis titled "Foundations of Analytical Economics", which turned into Foundations of Economic Analysis; as a graduate student at Harvard, Samuelson studied economics under Joseph Schumpeter, Wassily Leontief, Gottfried Haberler, the "American Keynes" Alvin Hansen. Samuelson remained there until his death.
Samuelson's family included many well-known economists, including brother Robert Summers, sister-in-law Anita Summers, brother-in-law Kenneth Arrow and nephew Larry Summers. During his seven decades as an economist, Samuelson's professional positions included: Assistant professor of economics at M. I. T, 1940, associate professor, 1944. Member of the Radiation Laboratory 1944–45. Professor of international economic relations at the Fletcher School of Law and Diplomacy in 1945. Guggenheim Fellowship from 1948 to 1949 Professor of economics at MIT beginning in 1947 and Institute Professor beginning in 1962. Vernon F. Taylor Visiting Distinguished Professor at Trinity University in spring 1989. Samuelson died after a brief illness on December 13, 2009, at the age of 94, his death was announced by the Massachusetts Institute of Technology. James M. Poterba, an economics professor at MIT and the president of the National Bureau of Economic Research, commented that Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands".
Susan Hockfield, the president of MIT, said that Samuelson "transformed everything he tou
Human capital is the stock of knowledge, habits and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. Human capital theory is associated with the study of human resources management as found in the practice of business administration and macroeconomics; the original idea of human capital can be traced back at least to Adam Smith in the 18th century. The modern theory was popularized by Gary Becker, an economist and Nobel Laureate from the University of Chicago, Jacob Mincer, Theodore Schultz; as a result of his conceptualization and modeling work using Human Capital as a key factor, the Nobel Prize for Economics, 2018, was awarded to Paul Romer who founded the modern innovation-driven approach to understanding economic growth. Human capital differs from any other capital, it is needed for companies to achieve goals and remain innovative. Companies can invest in human capital for example through education and training enabling improved levels of quality and production.
In the recent literature, the new concept of task-specific human capital was coined in 2004 by Robert Gibbon, an economist at MIT, Michael Waldman, an economist at Cornell. The concept emphasizes that in many cases, human capital is accumulated specific to the nature of the task, the human capital accumulated for the task are valuable to many firms requiring the transferable skills; this concept can be applied to job-assignment, wage dynamics, promotion dynamics inside firms, etc. Arthur Lewis is said to have begun the field of development economics and the idea of human capital when he wrote in 1954 "Economic Development with Unlimited Supplies of Labour." The term "human capital" was not used due to its negative undertones until it was first discussed by Arthur Cecil Pigou: There is such a thing as investment in human capital as well as investment in material capital. So soon as this is recognised, the distinction between economy in consumption and economy in investment becomes blurred. For, up to a point, consumption is investment in personal productive capacity.
This is important in connection with children: to reduce unduly expenditure on their consumption may lower their efficiency in after-life. For adults, after we have descended a certain distance along the scale of wealth, so that we are beyond the region of luxuries and "unnecessary" comforts, a check to personal consumption is a check to investment; the use of the term in the modern neoclassical economic literature dates back to Jacob Mincer's article "Investment in Human Capital and Personal Income Distribution" in the Journal of Political Economy in 1958. Theodore Schultz contributed to the development of the subject matter; the best-known application of the idea of "human capital" in economics is that of Mincer and Gary Becker of the "Chicago School" of economics. Becker's book entitled Human Capital, published in 1964, became a standard reference for many years. In this view, human capital is similar to "physical means of production", e.g. factories and machines: one can invest in human capital and one's outputs depend on the rate of return on the human capital one owns.
Thus, human capital is a means of production, into which additional investment yields additional output. Human capital is substitutable, but not labor, or fixed capital; some contemporary growth theories see human capital as an important economic growth factor. Further research shows the relevance of education for the economic welfare of people. Adam Smith defined four types of fixed capital; the four types were: instruments of the trade. Smith defined human capital as follows: Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society; the acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they that of the society to which he belongs; the improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, which, though it costs a certain expense, repays that expense with a profit.
Therefore, Smith argued, the productive power of labor are both dependent on the division of labor: The greatest improvement in the productive powers of labour, the greater part of the skill and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour. There is a complex relationship between the division of labor and human capital. Human capital is a collection of traits – all the knowledge, skills, experience, training and wisdom possessed individually and collectively by individuals in a population; these resources are the total capacity of the people that represents a form of wealth which can be directed to accomplish the goals of the nation or state or a portion thereof. The human capital is further distributed into three kinds.
Natural resources are resources that exist without actions of humankind. This includes all valued characteristics such as magnetic, electrical properties and forces etc. On earth it includes: sunlight, water, land along with all vegetation and animal life that subsists upon or within the heretofore identified characteristics and substances. Particular areas such as the rainforest in Fatu-Hiva are characterized by the biodiversity and geodiversity existent in their ecosystems. Natural resources may be further classified in different ways. Natural resources are components that can be found within the environment; every man-made product is composed of natural resources. A natural resource may exist as a separate entity such as fresh water, as well as a living organism such as a fish, or it may exist in an alternate form that must be processed to obtain the resource such as metal ores, rare earth metals and most forms of energy. There is much debate worldwide over natural resource allocations, this is true during periods of increasing scarcity and shortages.
There are various methods of categorizing natural resources, these include source of origin, stage of development, by their renewability. On the basis of origin, natural resources may be divided into two types: Biotic — Biotic resources are obtained from the biosphere, such as forests and animals, the materials that can be obtained from them. Fossil fuels such as coal and petroleum are included in this category because they are formed from decayed organic matter. Abiotic – Abiotic resources are those that come from non-living, non-organic material. Examples of abiotic resources include land, fresh water, rare earth metals and heavy metals including ores such as gold, copper, etc. Considering their stage of development, natural resources may be referred to in the following ways: Potential resources — Potential resources are those that may be used in the future—for example, petroleum in sedimentary rocks that, until drilled out and put to use remains a potential resource Actual resources — Those resources that have been surveyed and qualified and, are used—development, such as wood processing, depends on technology and cost Reserve resources — The part of an actual resource that can be developed profitably in the future Stock resources — Those that have been surveyed, but cannot be used due to lack of technology—for example, hydrogenMany natural resources can be categorized as either renewable or non-renewable: Renewable resources — Renewable resources can be replenished naturally.
Some of these resources, like sunlight, wind, etc, are continuously available and their quantity is not noticeably affected by human consumption. Though many renewable resources do not have such a rapid recovery rate, these resources are susceptible to depletion by over-use. Resources from a human use perspective are classified as renewable so long as the rate of replenishment/recovery exceeds that of the rate of consumption, they replenish compared to Non-renewable resources. Non-renewable resources – Non-renewable resources either form or do not form in the environment. Minerals are the most common resource included in this category. By the human perspective, resources are non-renewable when their rate of consumption exceeds the rate of replenishment/recovery; some resources naturally deplete in amount without human interference, the most notable of these being radio-active elements such as uranium, which decay into heavy metals. Of these, the metallic minerals can be re-used by recycling them, but coal and petroleum cannot be recycled.
Once they are used they take millions of years to replenish. Resource extraction involves any activity; this can range in scale to global industry. Extractive industries are, along with agriculture, the basis of the primary sector of the economy. Extraction produces raw material, processed to add value. Examples of extractive industries are hunting, mining and gas drilling, forestry. Natural resources can add substantial amounts to a country's wealth, however, a sudden inflow of money caused by a resource boom can create social problems including inflation harming other industries and corruption, leading to inequality and underdevelopment, this is known as the "resource curse". Extractive industries represent a large growing activity in many less-developed countries but the wealth generated does not always lead to sustainable and inclusive growth. People accuse extractive industry businesses as acting only to maximize short-term value, implying that less-developed countries are vulnerable to powerful corporations.
Alternatively, host governments are assumed to be only maximizing immediate revenue. Researchers argue; these present opportunities for international governmental agencies to engage with the private sector and host governments through revenue management and expenditure accountability, infrastructure development, employment creation and enterprise development and impacts on children girls and women. A strong civil society can play an important role in ensuring effective management of natural resources. Norway can ser
William Dawbney Nordhaus is an American economist and Sterling Professor of Economics at Yale University, best known for his work in economic modelling and climate change. He is one of the laureates of the 2018 Nobel Memorial Prize in Economic Sciences. Nordhaus received the prize "for integrating climate change into long-run macroeconomic analysis". Nordhaus was born in Albuquerque, New Mexico, the son of Virginia and Robert J. Nordhaus, who co-founded the Sandia Peak Tramway. Robert J. Nordhaus was from a German Jewish family — his father Max Nordhaus immigrated from Paderborn in 1883 and was a manager of The Charles Ilfeld Company branch in Albuquerque. Nordhaus graduated from Phillips Academy in Andover and subsequently received his BA and MA from Yale in 1963 and 1973 where he was a member of Skull and Bones, he holds a Certificat from the Institut d'Etudes Politiques and a PhD from MIT. He was a Visiting Fellow of Clare Hall, Cambridge in 1970-1971, he has been a member of the faculty at Yale since 1967, in both the Economics department and the School of Forestry and Environmental Studies, has served as its Provost from 1986–1988 and its Vice President for Finance and Administration from 1992–1993.
His tenure as provost was among the shortest in the university's history. He has been on the Brookings Panel on Economic Activity since 1972. During the Carter administration, from 1977–1979, Nordhaus was a member of the Council of Economic Advisers. Nordhaus served as the chairman of the Board of Directors of the Boston Federal Reserve Bank between 2014 and 2015. Nordhaus lives in New Haven, with his wife, Barbara, a social worker in the Yale Child Study Center. Nordhaus is the editor of over 20 books, he is the co-author of the textbook Economics, the original editions of which were written by fellow Nobel Laureate Paul Samuelson. The book is in its 19th edition and has been translated into at least 17 other languages, he has written several books on global warming and climate change, one of his primary areas of research. Those books include Managing the Global Commons: The Economics of Climate Change, which won the 2006 Award for "Publication of Enduring Quality" from the Association of Environmental and Resource Economics.
Another book, with Joseph Boyer, is Warming the World: Economic Models of Global Warming. His most recent book is The Climate Casino: Risk and Economics for a Warming World. In 1972 Nordhaus, along with fellow Yale economics professor James Tobin, published Is Growth Obsolete?, an article that introduced the Measure of Economic Welfare as the first model for economic sustainability assessment. Nordhaus is known for his critique on current measures of national income, he wrote, "If we are to obtain accurate estimates of the growth of real incomes over the last century, we must somehow construct price indexes that account for the vast changes in the quality and range of goods and services that we consume, that somehow compare the services of horse with automobile, of Pony Express with facsimile machine, of carbon paper with photocopier, of dark and lonely nights with nights spent watching television, of brain surgery with magnetic resonance imaging". Palda summarizes the importance of Nordhaus' insight as follows: "The practical lesson to be drawn from this fascinating study of lighting is that the way we measure the consumer price index is flawed.
Instead of putting goods and their prices directly into the index we should reduce all goods to their constituent characteristics. We should evaluate how these goods can best be combined to minimize the cost of consuming these characteristics; such an approach would allow us to include new goods in the consumer price index without worrying about whether the index of today is comparable to that of ten years ago when the good did not exist. Such an approach would allow governments to more calculate the rate at which welfare and other forms of aid should be increased. At present such calculations tend to overestimate the cost of living because they do not take into account the manner in which increases in quality reduce the monetary cost of maintaining a certain standard of living." Nordhaus has written on the economics of climate change. He is the developer of the DICE and RICE models, integrated assessment models of the interplay between economics, energy use, climate change. A Question of Balance: Weighing the Options on Global Warming Policies ISBN 978-0-300-13748-4 was published by Yale University Press on June 24, 2008.
In Reflections on the Economics of Climate Change, he states: "Mankind is playing dice with the natural environment through a multitude of interventions – injecting into the atmosphere trace gases like the greenhouse gases or ozone-depleting chemicals, engineering massive land-use changes such as deforestation, depleting multitudes of species in their natural habitats while creating transgenic ones in the laboratory, accumulating sufficient nuclear weapons to destroy human civilizations." Under the climate change models he has developed, in general those sectors of the economy that depend on unmanaged ecosystems – that is, are dependent upon occurring rainfall, runoff, or temperatures – will be most sensitive to climate change. Agriculture, outdoor recreation, coastal activities fall in this category." Nordhaus takes the catastrophic impacts of climate change. Nordhaus, who has done several studies on the economics of global warming, criticized the Stern Review for its use of a low discount rate: The Review's unambiguous conclusions about the need for extreme immediate action will not survi